How I build strategic moats for my bootstrapped company [#80]

I read something intriguing somewhere the other week (wish I could provide the source):

“There are really two types of companies that are truly VC-backable – super deep tech companies with deep strategic moats, and companies that are riding a tectonic shift (eg. delivery companies during COVID, Facebook / Google when the internet made everything accessible, Instagram when mobile became a thing etc)”

This stuck with me: ever since I moved to Berlin and entered the VC-backed startup scene, I got the feeling that if you wanna build something great, you need to take on VC.

I’ve changed my mind on this, and this quote partially explains why. 

Now that you can “literally just do things”, most companies will be fairly easy to disrupt. You don’t need a ton of money anymore to build out the next B2B FinTech SaaS. Lovable will just build it for you. 

To build a defensible (and thus VC-backable) company, you either need to ride a tectonic shift (eg. AI), or be highly specialized in one very specific thing.

So if you don't have one of those two, it's probably better to build a profitable small business where it's okay to not have a deep strategic moat (you can still build one, more on this below).

Yet I still see way too many people chase the allure of big funding rounds, both as founders but also as employees. Kind of like the Dominik of 2020 that just moved to the big German startup city.

This is how I think about founding a company today:

• I want to be an entrepreneur because I like the freedom that comes with it (how I allocate my time, how I make decisions, where I spend my time, etc)
• If I take on funding, I have a boss again that could fire me at any point 
• So the very thing why I became an entrepreneur goes away 

I honestly couldn’t care less about a mega-exit. I care about cashflow: about building a business that consistently returns money, year over year.

Why wait for a big exit that may or may not come, when you could just have a mini exit every single month? 

Entrepreneurship is already risky enough. Add to this the inherent risk of return inside VC-backed companies: as a founder (or early employee), you have no idea whether you’ll actually see money in the end.

Even when things are looking bright, the markets might shift, your company raises a round with bad liquidation preferences, or sells at a much lower valuation than it previously raised at. 

Instead, I want to de-risk what I do as much as possible. This is how: 

• Build distribution first 
• Build a cashflow positive, service-led business (products require upfront investment, services generate cash from day 1), ideally something that has already been proven elsewhere 
• Use this business to increase distribution
• Use increased distribution to build more businesses 
• Build those businesses from insights gained from the initial business and/or the audience 

Rinse and repeat.

This is what it looks like in practice: 

1. I started building the seed distribution by starting this newsletter on the last day of 2022.
2. I then turned this initial distribution into an initial product (Personal Productivity OS) and a service-led business (Generalyst). 
3. Generalyst then drives subscribers to this newsletter (like yourself), increasing distribution (fun fact: even the online course launch led to ~50 new subscribers)
4. Off this distribution, I can then build new services and products (eg. the job hunt accelerator, but also additional services that I identify through my work with early-stage companies) 
5. Ideally, these products drive word-of-mouth, acquiring new users that then convert to the newsletter 

What you’re reading here is the core piece of this strategy: the main distribution pillar that everything funnels back to.

(Not subscribed yet? Help me increase distribution and start building the career you want today by subscribing here.)

This also makes it easier to make strategic decisions: does this help me increase my distribution? If yes, it’s probably worth doing. This is, for instance, why I – despite very limited returns so far – still invest into publishing on Threads, X, Bluesky, Instagram, TikTok, and YouTube

I consider this a “personal media company”: my own distribution center that’s centered around a personal brand. 

“First time founders are obsessed with product, second time founders are obsessed with distribution.” — Justin Kan, founder of Twitch

In a world where defensibility is hard to come by (as we established earlier), the best competitive moat you can build for yourself is a personal brand with killer distribution. 

You just don’t need VC for that. 

All it takes is hard, consistent work for an extraordinary amount of time. 

That's all.

Whenever you're ready, there are four ways I can help you:

[1] Reclaim up to 4 hours per day and find time to do the things you've always wanted to do by enrolling into Personal Productivity OS.

[2] Hire your next Founder's Associate or other business generalist position with my startup, Generalyst Recruiting.

[3] You could also find your next startup job in Europe by simply applying as a candidate.

[4] Learn how you can build your career as a generalist by subscribing to this newsletter. ⬇️